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Sunday, 21 June 2015

It seems the world is changing at a rapidly
increasing pace and getting ever more complex. This calls for a new and more
efficient approach to decision-making. However, today's democratic institutions
are slow, and they are expensive, too. In the meantime, most countries have piled
up debt levels that can hardly be dealt with. In order to cope with this, two
concepts have been around for some time: (1) the "China model", as
China has developed much faster than Western countries recently,[1] and (2) giving more control to multi-national corporations, as they tend to be
more efficient than government institutions.

The China model

Has the French Revolution been a tragic historical
accident that is now making our lives more difficult? Are democratic
decision-making procedures outdated and blocking our way into a better future?
Would it be favorable to have more top-down control? This might certainly
accelerate decision-making, but would the resulting decisions be better and
sustainable, too?

If we implemented the Chinese approach in Europe or
the USA, we could easily decide to build a road over here, a shopping mall over
there, and even new city quarters or entire towns. Moreover, these projects
could be realized in just a few years. This may sound tempting to
decision-makers. However, improving a system becomes more difficult the better
it is, and given the many interdependencies, any improvement in one part of the
system comes with undesired side effects in another part. Over time, many
decisions turn out to be less favorable than expected, and quick decisions
often result in mistakes. For example, there are many "ghost malls"
in China, which almost nobody wants to use, and empty "ghost towns",
too. Moreover, environmental pollution has become a serious issue. Some cities
are now suffering of smog levels that imply considerable risks to health and
make them almost dysfunctional.

At the same time, even though China has quickly
developed, the satisfaction of its people with politics has not everywhere
increased. Due to the world economic crisis, China is even seeing a dangerous
reduction in its economic growth rate, and it must reorganize its economy. To
reduce the likelihood of protests, information flows to and from the country
are increasingly controlled by the government. In other words, China shows
worrying signs of destabilization.[2]
India's democracy, in contrast, is doing increasingly well.[3]
Also in Europe, federally organized systems such as Germany and Switzerland are
performing better than more centrally governed countries such as France and
Spain. In fact, it can be said that the most advanced economies in the world
are the most diverse and complex economies.[4]

Can corporate control fix the
world?

As the governments around the globe have often
failed to find solutions to problems such as climate change, companies are
often demanding more control. This is probably what the free trade and service
agreements, which are currently under secret negotiation, are about:
governments will give up some of their power and hand it over to corporations.

Would it be better to run the world by
multi-national companies? In fact, companies are often more efficient than
governments in accomplishing specific tasks that can be well monetized.
However, if we look at maps of what regions of the world are controlled by what
companies, it does not look less fragmented than the map illustrating the
hypothetical "clash of cultures". So, can we really expect that corporate
control would result in more agreement in the world?

While large corporations have certainly a lot of
power to move things ahead, they often have low innovation rates and tend to
obstruct innovations of others. It even happens that the value of own inventions
isn't recognized. For example, Xerox did not see the value of the Windows
software they invented. The value of the mp3 music file format was
underestimated, too, and nobody expected text messaging to become important. To
compensate for their innovation problem, large corporations often buy small and
medium-size companies. Nevertheless, this typically does not help them to stay
on top for a long time. Within a period of just 10 years, 40 to 50 percent of
top 500 companies disappear. Given such high takeover and "death"
rates, societies would be extremely unstable if run by corporations. In
contrast, countries and cities persist for hundreds of years, exactly because
they are governed in a more participatory way, unlike corporations.

In summary, there is little evidence that companies
would solve the problems of the world. I don't deny that many companies have
laudable goals. The use of self-driving cars, for example, intends to eliminate
accidents, which have killed a lot of people in the past. Moreover, by means of
personalized medicine, genetic engineering and biological enhancements, some
companies want to overcome death altogether. However, none of these ambitious
goals have been accomplished yet. I might start to believe in corporate control
of our globe, if we had a perfect world everywhere within a 100 kilometer
radius of Silicon Valley, but this is far from being true. There is a lot of
light, but a lot of shadow too. So far, not a single city in the USA is in the
top 20 list of most livable cities. In other words, we need new approaches to
solve the world's ills. Will an evidence-based approach using the wealth of
today's data be able to heal the world?

[1] D.A. Bell (2015) The China Model. Political Meritocracy and the Limits
of Democracy (Princeton University).

[2] Based on a statistical analysis of Jürgen
Mimkes, China will
now undergo a major transformation towards a more democratic state in the
coming years. First signs of instability of the current autocratic system are
visible already, such as the increased attempts to control information flows.
The following recent articles support the conclusion regarding increased
instability in China (please use, for example, Google Translate where needed):

Wednesday, 17 June 2015

By Dirk Helbing

These days, many people seem to be asking: "Are the concepts of freedom and democracy obsolete?" Let us look into this. The"freedom of will"or "freedom of decision-making" has, in fact, been questioned many times and for various reasons. For example, some religions believe that our destiny is predetermined. If this were true, then our life would basically be like playing back an enhanced 3D movie. We would not have any possibilities to choose, but also no responsibility for what we do. Consequently, people would be sent to prison not for wrongdoing, but for disturbing public order. There would be also no freedom of press. However, in such a framework, business leaders and policy-makers couldn't take any decisions as well. We would just all have to accept what is happening to us.

In other cultures, it is being recognized that people may make their own decisions, but everyone is expected to subordinate personal decisions to the interests of higher-level institutions or to those who are more powerful. These societies are hierarchically organized. The caste system in India is a good example of this. Compared to this, in Western democracies, the power of people and institutions has been restricted by law in favor of individual freedom, which boosted entrepreneurial activities, growth, prosperity, and social well-being.

Now, however, countries such as Singapore and China are experiencing larger economic growth rates, even though they restrict individual freedom. Should other countries copy their model? I don't think this would be a good idea. Firstly, a political system must be culturally fitting. Secondly, these countries are net importers of new ideas. If every country would be run like Singapore and China, we would probably lose a lot of innovation capacity (see figure below). Generally, countries supporting individual freedoms are better at boosting new ideas (see the green bars in the graphic below), while others are better at applying them (red bars). Moreover, it is known that the most diverse economies are the most developed ones. [1]

Figure 1.2: New scientific ideas are produced primarily in democratic
societies supporting freedom of thought, speech, and markets.[2]

Recently, new critique
of the "freedom of decision-making" comes from neurobiologists. Their
experiments suggest that the feeling of free decision-making arises
after the decision was actually made in the brain. However, this
does not prove anything. Decision, execution and conscious recognition
are separate things. [3]
The feeling of having taken a free decision might be just a conscious confirmation of execution.

Of course, our decisions
are often influenced by external factors. However, the old idea of
behavioralism that people would be programmed like a computer (by
education and other external influences such as public
media) and that they would execute what they have been programmed for
has failed long ago.

There is little doubt
that most people can learn to take different decisions in identical
situations (if they are not in a deprived state). A conscious decision
resulting from a deliberation process compares possible
alternatives from a variety of perspectives, before a decision is made.
In a sense, it is the art of decision-making to consider many aspects
that might matter, and some people are very good at simulating possible
decision outcomes in their brain.

From a societal
perspective, however, it does not matter much whether different decision
outcomes resulting in practically identical situations are the
consequence of free will, randomness, or other mechanisms
(such as "deterministic chaos" or "turbulence"). What really matters is
to have socio-economic institutions that support innovation and the
spreading of good ideas.

If we want to master the
challenges of the future, we must produce more ideas that help us to
adapt to environmental, social, economic and technological change and to
accelerate their application. So, rather than
a predictable society we need one that can cope with surprises and
benefit from it. Pluralism, diversity, and participation shouldn't be
seen as concessions that democracies have made to their citizens. They
are ways to produce innovation and collective intelligence,
in other words: to generate better solutions. Certainly, democracies,
like all other political regimes, can (and should) be further improved. If we want to solve the world's problems, we must increase our problem
solving capacity. We must get more efficient
in taking the best ideas on board and combining them. There is little
doubt that those societies will be leading, which manage to activate the
motivation, skills, ideas, and resources of everyone in the best
possible way and to create a win-win-win situation
between business, state, and citizens. For this, we need to figure out
what roles "participation", "interoperability" and "externalities" can
play.

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The activities leading to these results has received funding from the European Union Seventh Framework Programme (FP7/2007-2013) under grant agreement n° 284709 - project 'FuturICT', a Coordination and Support Action in the Information and Communication Technologies activity area